The European Commission has proposed a plan to add a 3% tax on the revenues of digital tech companies like Google, Facebook, and Amazon in order to make sure that they pay “their fair share.”
The proposal notes that digital companies have become far more important in recent years: nine of the world’s top 20 companies by market cap are now digitally based, versus just one in 20 a decade ago.
The proposal also claims that digital-based companies have an average effective tax rate roughly half of what more traditional companies pay since EU member states can’t tax digital companies’ sales in Europe when they have no physical presence there.
It’s worth pointing out that this plan would only target larger companies; smaller startups with lower revenues wouldn’t be included.
